FREDERICTON – Finance Minister Blaine Higgs said Friday the provincial deficit has increased by at least $50 million, bringing the total spending shortfall to more than $800 million.
Higgs said significant fiscal challenges have caused the deficit to climb substantially since the last fiscal update.
The former Liberal government projected a deficit of $749 million in its budget last spring.
“We’re now looking at a deficit of over 800 million,” Higgs said. “We have to make sure people understand what we’re up against.”
Liberal finance critic Donald Arseneault said the Conservative government is setting the stage for Tuesday’s Throne Speech.
“There is no doubt the Tories are trying to set the stage for the Throne Speech next week,” he said. “They’re painting a bleak picture so they can start their cost-cutting in earnest.”
The Progressive Conservative government has pledged to pull the province out of the red within the next four years.
Higgs is approaching the fiscal crisis cautiously, calling on all civil servants to come up with a modest one-per-cent budget cut this fiscal year and two per cent each year after that.
However, Higgs has admitted more needs to be done and said all budget balancing tools, including deeper government cuts or a hike in taxes, must be on the table.
The Department of Finance will begin a budget consultation process on Monday to gather input from New Brunswickers on the best ways to cut costs or raise revenues.
Charles Cirtwill, president of the Atlantic Institute for Market Studies, said the No. 1 priority has to be getting spending under control.
“No government in Atlantic Canada has been able to do that yet,” he said. ‘It’s no surprise the deficit continues to slip upwards but it’s certainly a disappointment.”
Cirtwill also said New Brunswick should seriously consider a two-per-cent increase in the consumption tax, something recommended during discussions on reforming the province’s tax structure.
“If you’re going to reduce income taxes – which makes absolute perfect sense to maintain your economy going forward – you should be looking at increasing the HST two points,” he said.
“I know they promised during the election they wouldn’t raise taxes, but at this point, they’re going to have to,” he said. “If you want to make campaign promises to spend more money you have to cut elsewhere or raise revenues.”
Canadian Taxpayers Federation Atlantic director Kevin Lacey dismissed calls to increase taxes in New Brunswick.
“This more than anything proves we have to keep taxes as low as possible,” he said. “The government should keep its commitments on keeping taxes low.”
“When provinces raise taxes it lowers the revenues they get from taxes because they hurt the economy so much,” he added. “As a result they make the deficit problems worse.”
Lacey said Higgs should slash wasteful spending to create a leaner and more efficient public service.
Higgs is expected to provide more details of the fiscal update and New Brunswick’s mounting deficit during a speech to the Saint John Board of Trade on Monday at the Saint John Trade and Convention Centre.
The full update on the province’s fiscal position will be released Friday.